Correlation Between Viceroy Hotels and Power Finance

Can any of the company-specific risk be diversified away by investing in both Viceroy Hotels and Power Finance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Viceroy Hotels and Power Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viceroy Hotels Limited and Power Finance, you can compare the effects of market volatilities on Viceroy Hotels and Power Finance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Viceroy Hotels with a short position of Power Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viceroy Hotels and Power Finance.

Diversification Opportunities for Viceroy Hotels and Power Finance

-0.05

Correlation Coefficient

Viceroy Hotels  Power Finance

Good diversification

The 3 months correlation between Viceroy and Power is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Viceroy Hotels Limited and Power Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Finance and Viceroy Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Viceroy Hotels Limited are associated (or correlated) with Power Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Finance has no effect on the direction of Viceroy Hotels i.e., Viceroy Hotels and Power Finance go up and down completely randomly.

Pair Corralation between Viceroy Hotels and Power Finance

Assuming the 90 days trading horizon Viceroy Hotels Limited is expected to under-perform the Power Finance. In addition to that, Viceroy Hotels is 1.19 times more volatile than Power Finance. It trades about -0.04 of its total potential returns per unit of risk. Power Finance is currently generating about -0.02 per unit of volatility. If you would invest  47,693  in Power Finance on September 26, 2024 and sell it today you would lose (2,573) from holding Power Finance or give up 5.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Viceroy Hotels Limited  vs.  Power Finance

Viceroy Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viceroy Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Power Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Power Finance is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Viceroy Hotels and Power Finance

The main advantage of trading using opposite Viceroy Hotels and Power Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viceroy Hotels position performs unexpectedly, Power Finance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Power Finance will offset losses from the drop in Power Finance's long position.

The idea behind Viceroy Hotels Limited and Power Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.